ING: euro-denominated T-bills could have a yield of 4%

The Finance Ministry’s tender of €0.5 billion one-year euro-denominated T-bills is likely to produce a yield of 4%, according to the estimates of Vlad Muscalu, economist at ING Bank Romania.

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The Ministry of Finance is tendering today €500 million one-year treasury bills following to use the amount drawn from the commercial banks to finance the budget deficit and refinance public debt.

“The Ministry of Finance tenders today €0.5bn 1Y euro-denominated T-bills. A yield level of around 4% seems likely and the tapped amount might exceed the intended one given the recent preference for extending loans to the public sector and as the latest decision to ease hard currency reserve requirements has freed an estimated €1.4bn”, ING said in a report.

The postponement of the disbursement of the third trance under the aid deal with International Monetary Fund has forced the central bank to cut the required reserve ratio for Fx-denominated liabilities to 25% from 30% to “meet the governmental sector’s financing needs”.

Sources in the National Bank of Romania said the move had freed up €1-1.2 billion.

This is the third tender organized by the Romanian state this year, and the amount it will obtain could be double than the one announced. The first tender euro-denominated T-bills tender took place on August 14 , when the Ministry of Finance placed through public subscription four-year euro-denominated T-bonds of €447 million , 49% above the initially announced level, at an annual rate of 5.25%.